gorrow (L) and single @ ksubi bondi, november 27/the cobrasnake
“Ksubi goes pop” was the headline of a vogue.co.uk story on November 24, referring to the hipster Sydney denim label’s plans to transplant its 'Lest We Regret' pop-up store to London in early 2009. The pop-up store recently debuted within the Little Collins Street boutique of Melbourne streetwear label Schwipe - which installation, incidentally, was reported elsewhere to have been decorated with jars containing Ksubi’s shredded financial records. In the wake of a spate of recent reports – which follow at least six months of ragtrade buzz that Ksubi has, once again, been unable to pay its bills – some may well be wondering if the vogue.co.uk headline might have been a self-fulfilling prophecy. Especially if Diesel founder Renzo Rosso, or some other party, does not come to the rescue.
Picking up earlier reports in The Age, The Herald Sun and The Sunday Telegraph, on December 1st Runway Reporter reported that 15 Ksubi staff had been made redundant and that an urgent director’s meeting was scheduled for last week.
A debt burden of A$8million has been bandied about by several media outlets, including The Sydney Morning Herald, whose Private Sydney column on Saturday revealed that the company may be in talks with Rosso – even if rumours of both discussions with Rosso and “crippling debt” were hosed down by directors Dan Single, George Gorrow and “executive consultant” Harry Hodge.
In a statement, Single and Gorrow told the SMH:
"It's absolutely not true that Ksubi has been bought by Diesel or any other party. We have never even met with them before. We are, however, heading to Asia and Europe next week to talk business with our manufacturers and distributors."
Hodge told The Herald’s Andrew Hornery:
"Sure, we have had redundancies and trading is difficult at the moment, but it's difficult for everyone. We have had to raise capital in the past and we may well do that again in the future".
Yes, times are tough. And whichever way it swings, Ksubi is by no means the only fashion company to fall victim to the global economic crisis. Two young high-profile Danish labels, Jens Laugesen and Camilla Staerk, recently shuttered.
The US retail market, which would have accounted for an important chunk of Ksubi’s estimated A$24million sales turnover, is in very, very bad shape. It is rumoured that Ksubi has now closed its US office.
Sydney eveningwear specialist Jayson Brunsdon recently described the impact on his US Fall/Winter 0809 sales as “a disaster” - and, like sass & bide, did not show at the SS09 New York shows in September.
Another Sydney denim brand, 18th Amendment, revealed to WWD earlier this year that the company had pulled out of more than 100 US stockists and was attempting to claw back a A$500,000 debt out of the US, from stockists who were not paying. 18th Amendment director Rachel Rose conceded that the brand, which launched in 2006, had been sold too widely in the US market.
But with Zimmermann reporting growth in the US, evidently, success – nay survival – depend on a company’s business model. Zimmermann is of course not in the denim market. The company has moreover spent a decade building up its brand equity in the US swimwear and resortwear market, which may well have partially insulated it from the recent downturn.
But while Ksubi may be able to apportion some blame to the current economic crisis, this is not the first time the company has experienced problems.
Ksubi launched at Australian Fashion Week in May 2001, originally under the Tsubi brand name, with a runway show that was famously infested with 169 rats.
By November 2005 the Australian and New Zealand ragtrade was rife with rumours that Tsubi owed money to suppliers.
Although Single flatly denied the company was experiencing cashflow problems, one supplier told this journalist at the time that his company was owed several hundred thousand dollars – part of what was understood to be a much wider debt to other suppliers that could have been as high as A$1million.
Then in April 2006, Single and Gorrow found themselves embroiled in a trademark dispute with Californian footwear brand Tsubo.
When asked about the dispute, Gorrow told the SMH:
"I haven't heard that. I don't even know these guys. I don't even know who they are. Have you ever seen one of their shoes? Maybe I've been drunk for the past 12 months."
According to Tsubo’s lawyer, Jack Douglas, however, Tsubo’s communications with Tsubi had dated back several years but were ignored by Tsubi, prompting Tsubo to commence legal proceedings in the Federal Court in New York.
The parties settled out of court, with Tsubi permitted to retain its original name within Australia, but obliged to adopt the new brand name of Ksubi in the rest of the world.
Although dubbed by Dan Single as "a great result for Tsubi", the two-brand scenario was described by Sam Osborn, the Australian ceo of Interbrand, the world’s best-known branding consultancy, as a potential “branding nightmare” for Tsubi.
Shortly thereafter, a decision was made to adopt the universal brand name of Ksubi.
According to Interbrand's Osborn, the rebranding process alone could have cost A$1million.
In May last year, much ado was made of the arrival of Quiksilver Europe co-founder Hodge as a minority shareholder.
Hodge’s private investment company Kauai may have already been a Ksubi creditor – having reportedly loaned Ksubi A$550,000 in November 2006.
In a statement, Single and Gorrow said:
“As Ksubi aspires to grow its international reputation to become one of the leading fashion and lifestyle brands, we knew we had to bring in people who could guide the growth of our brand as we expand across many different product areas and grow our global business.”
According to sources, Single and Gorrow had planned to take the brand to A$100million sales.
But could Renzo Rosso be seriously interested in helping them do it?
The 53 year-old Italian, who is rapidly turning into one of the new titans of the global fashion business, is already busy with his own blockbuster denim/streetwear brand Diesel, which reportedly accounted for 90percent of the 1.3billion euro 2007 revenues of Rosso’s Only The Brave parent company.
Then there is the burgeoning brand portfolio of Only The Brave’s Staff International subsidiary, whose latest addition, a five-year licensing agreement with Marc Jacobs menswear, joins a stable that already includes either controlling interests in, or global manufacturing/distribution licensing rights for, names such as Maison Martin Margiela, Viktor & Rolf, Vivienne Westwood, Dsquared and Sophia Kokosalaki.
Sure, Dsquared and co boast a denim component, however Rosso’s impresario penchant would appear to be tickled more by high profile, niche luxury brand names in need of a financial legup – than denim/streetwear rivals seeking to cannibalise Diesel’s market share.
But let’s wait and see.
It sounds as if Ksubi may have to take a number in the growing line of other Rosso hopefuls, which reportedly include London-based denim brand Superfine, which was co-founded by Australian Lucy Pinter.
In the meantime, if Ksubi does indeed owe anywhere near A$8million, then presumably there are a lot of nervous 'little' people out there.
Unlike Single and Gorrow, the latter don’t lead 'rock star' lifestyles, DJ on the Euro dance party circuit or get their faces on the photoblog of great Ksubi mate Mark 'The Cobrasnake' Hunter.
But Ksubi could not have made its garments without them.
No doubt they are concerned that they may face the prospect of never being paid.